If a firm is practicing third- degree price discrimination and is charging a price of $5 per unit to consumers in Group A and a price of $9 to consumers in Group B, which of the following is true?
A)Group A consumers have a lower price elasticity than Group B consumers.
B)Group A consumers are less responsive to price changes than Group B consumers.
C)Group B consumers have a greater price elasticity than Group A consumers.
D)Group A consumers have a greater price elasticity than Group B consumers.

Question

Quizplus · Accepted Answer

Third-degree price discrimination involves charging different prices to different groups based on their price elasticity of demand. Group A, being charged a lower price, indicates they have a greater price elasticity of demand, meaning they are more sensitive to price changes than Group B.

If a Firm Is Practicing Third- Degree Price Discrimination and Is